Starting from Scratch in East Timor

November 11, 2003

By Frederik Balfour Kay Rala Xanana Gusm?o became President of the world's newest country, East Timor, in May, 2002. A veteran guerrilla leader against the 24-year Indonesian occupation of his country, Gusm?o faces the challenge of managing the peace for 750,000 people in an impoverished but oil-rich country (see BW Online, 5/22/03, "In East Timor: Justice, Not Revenge").

I had last seen Gusm?o in October, 1999, the day the last Indonesian troops left his country. Wearing battle fatigues, he came down from the Timorese mountains to watch as the final chapter of his struggle came to a close on the sun-bleached tarmac of Dili Airport. When I met the President last month, he was wearing a suit, sitting comfortably on a leather couch in the Grand Hyatt Hotel in Hong Kong. He gave me a warm hug -- my first from a President -- lit himself a Marlboro, and began to talk. Edited excerpts of our conversation follow:

Q: What are your biggest challenges as President?

A: First is to strengthen the governing institutions. The judiciary is the weakest. We inherited from UNTAET [the U.N. Transitional Authority of East Timor] a problem of appointing judges and prosecutors [who lack] training.

There are rumors [about corruption], but you must consider their inexperience, and maybe we have to pay attention to what they earn. Like when we talk about police as agents of law and order -- if they receive a bad salary it's easier [to understand why they don't] defend law and order. We feel that we have to discuss issues like justice, law and order, and police in a wider [context].

Another challenge is how to develop the country -- the poorest in Southeast Asia. How do we face globalization, and how can we survive as an independent nation? The third challenge is making the expectations of our people reality. And lastly, we need to strengthen democratic values and human rights [to give] the people the sense that they are [participants] in the process, not followers or spectators.

Q: What about education?

A: More than half our population is under 20, and yet not all the schools [destroyed in 1999 by Indonesians soldiers and militia] have been reopened. But for me education is a medium- and long-term strategy -- not an immediate priority. We already have thousands and thousands of youth with secondary schooling.

[I emphasize the importance of education to young people] when we talk about attracting investment. I tell the young people [if] they are not skilled, when investors come we will only be the cleaners and the security guards.

Q: What areas are most promising for economic development?

A: We have coffee exports. But we need to establish a new policy with plantations. We know we can't compete in quantity, but we can do it with quality -- for example, we have 100% organic coffee.

We have a plan to be self-sufficient in agriculture in 7 to 10 years. At the moment we import everything. We have no food-processing industry. We even have to import oranges. Yet our land is so fertile. It hurts me. We are also looking to fishing and other sectors. We're now a member of the African-Caribbean-Pacific export treaty with the European Union.

Q: Do you have any agricultural-credit programs?

A: Not yet.

Q: Given East Timor's breathtakingly beautiful coastline and lush, tropical mountains, how about tourism?

A: We have no more than about a hundred tourists on organized tours a year -- maybe a couple of thousand at the most including returning East Timorese. We don't have the infrastructure.

Q: How about foreign investment in tourism?

A: We don't have a legal framework yet. That is something Parliament and the government will do next year.

Q: What's the status of your oil and gas agreements with Australia, with whom you have overlapping claims?

A: Provisionally we said it was O.K. in Bayu Undan field [in a deal for the liquefied natural-gas field operated by Conoco Philips (COP) in which East Timor gets 90% of royalties] and Great Sunrise [in which it gets 18%].

We accepted because we didn't want to cause difficulties for the companies in the field. But we are not going to inherit a deal signed between Australia and Indonesia [which invaded East Timor in 1975 and occupied it until 1999]. We don't talk about renegotiating. We are negotiating for the first time as an independent country.

Q: Is the country ready to operate on its own when the U.N. leaves next May?

A: Yes, but we still need the presence of small mission there. We will still need some advisers in key areas like judiciary, finance, banking, and management. And we still need assistance in making our police more professional and effective.

Q: Are you concerned about militia?

A: Yes.... The problem is that we can't expect that the indicted people will present themselves voluntarily to be tried. But I believe that with more comprehensive policy from Indonesia [where most of the people accused of atrocities are now living], we will surpass this problem.

Q: Do they pose a security threat?

A: Yes -- when they cross the border [from Indonesia] and kill people and go back. The last cases were in January and February.

Q: Are you happy with the progress of the U.N.-funded Serious Crimes Unit, which is supposed to bring such people to justice?

A: Too much money is being spent on the Serious Crimes Unit. We [believe in] justice, and we defend justice, but if we think about all the processes of building the nation and stabilizing the country, [seeking] justice is important but not the only way.

Many militias are involved and are in West Timor, Indonesia. We can't go there [because there is no extradition treaty with Indonesia]. Of course our people suffered for 24 years [but] the best justice was the recognition of our right to be independent.

People didn't fight just for a flag and a constitution. There were dreams [for] a better life. We could better apply the money [spent on the Serious Crimes Unit] to build a good judicial system. Then investors can trust us, and we can develop our country. [It doesn't make sense] to put everyone in prison [who fought against our independence] with three meals a day, while our people don't have clean water or medical assistance and only eat one meal a day.

Q: What's the government budget?

A: About $72 million -- more than half of which comes from donors.

Q: How do you feel about the U.S. decision to spend $87 billion on Iraq and Afghanistan?

A: I don't say I'm very worried, but very sad. We would hope that by doing everything we could do in terms of stabilizing the process and not denying the values we fought for that we can still receive attention from the international community.

Q: How much does the U.S. give?

A: U.S. aid is active in running programs worth about $25 million. They wanted to reduce that, but our Foreign Minister went to talk to them, and compared to $87 billion it's so small, so they agreed not to reduce it.

Q: Do you have an official residence?

A: No. I live outside town, up in the hills. As President the state gives me a car, and a driver, and guards. But it has meant losing my private life. Balfour is a correspondent for BusinessWeek in Hong Kong